The SBTi Net-Zero Corporate Manual

1 Partner organizations The SBTi Net-Zero Corporate Manual The SBTi Net-Zero Corporate Manual Version | July 2021. @ScienceTargets /science-based-targets Partner organizations Version Release date Purpose Updates on earlier version Road test - Clarification on 5-10 year timeframe for near- term SBTs, timeline updates, minor updates to Road test spelling and grammar, minor updates to Appendix III. The SBTi Net-Zero Corporate Manual Version | July 2021. @ScienceTargets /science-based-targets Partner organizations Contents Part 1: 1. About this guidance .. 1. What are science-based targets?.. 1. The Net-Zero Standard development process.

2 2. What does the Net-Zero Road Test entail? .. 3. Why focus on emission reduction target criteria in this road testing ? .. 3. Part 2: Terminology and updates to current SBTi 6. Science-based targets terminology .. 6. Near-term science-based 6. Long-term science-based targets .. 6. Changes to near-term SBT criteria .. 7. Part 3: Mitigation pathways in the Net-Zero Standard .. 8. How mitigation pathways are used to inform SBTs .. 8. Available pathways and which companies should use them .. 9. Preliminary pathway data for long-term SBTs ..10. Box 1. In-progress work on C pathways ..14. Part 4: Setting near-term and long-term science-based targets.

3 15. Select a base year ..15. Calculate your company's emissions ..16. Develop a full GHG emissions inventory ..16. Calculate relevant emissions that are reported separately from the GHG inventory ..18. Set SBT boundaries ..18. Near-term SBT boundary (scopes 1, 2, and 3) ..18. Long-term SBT boundary (scopes 1, 2, and 3) ..19. Additional required SBT coverage ..19. Meeting SBTi boundary criteria with several targets ..20. Choose a target year ..21. Calculate targets ..21. Calculating near-term Calculating long-term SBTs ..25. Box 2. A note on FLAG emissions ..33. Box 3. Can insetting count towards my scope 3 reduction?

4 35. Part 5: Updating and communicating targets ..36. SBTi Net-Zero Corporate Manual Version | July 2021. @ScienceTargets /science-based-targets Partner organizations What steps can you take if your current Net-Zero targets don't align with the requirements of the Net-Zero Standard? ..36. How can you ensure your near-term targets align with the Net-Zero Standard? ..36. How can you ensure you long-term targets align with the Net-Zero Standard? ..36. How to upgrade your near-term SBTs to align with the Net-Zero Standard ..37. How to communicate with stakeholders when Net-Zero targets do not meet the Net-Zero Standard requirements.

5 38. Part 6: Conclusion and next steps ..39. Appendix 1: Sector-specific guidance for long-term SBTs ..40. Appendix 2: Further guidance for companies with significant FLAG emissions ..45. Land sector guidance is evolving ..45. What counts towards FLAG emissions?..46. How can you determine if your company's FLAG emissions are significant? ..46. What options are available for your company to set FLAG emission reduction targets?..47. For near-term science-based targets ..47. For long-term science-based targets ..47. Appendix 3: Can companies include nature-based solutions in science-based targets? ..48. Using NBS to achieve both near and long-term science-based targets.

6 48. Appendix 4: Transitioning to global Net-Zero in line with climate and sustainability goals ..50. Appendix 5: Appendix 6: Glossary ..52. SBTi Net-Zero Corporate Manual Version | July 2021. @ScienceTargets /science-based-targets Partner organizations Part 1: Background About this guidance This guidance document provides information to companies participating in the Net-Zero Standard road test on how to set emission reduction targets as part of a Net-Zero commitment aligned with science. This Manual will be updated and published when the Standard is launched based on feedback received throughout the road test. The document serves as an accompaniment to the Science Based Targets initiative (SBTi).

7 Net-Zero Criteria, Net-Zero Tool and Net-Zero How-to Guide. It is split into six parts and laid out as follows: Part 1: Background Part 2: Terminology and updates to current SBTi criteria Part 3: Mitigation pathways in the Net-Zero Standard Part 4: Setting near-term and long-term science-based targets Part 5: Updating and communicating targets Part 6: Conclusion and next steps The intended audience for this document is companies with over 500 employees that wish to commit to Net-Zero through the SBTi. These documents cover Corporate Net-Zero targets and do not cover financial institution Net-Zero targets. The SBTi's financial sector project is developing specific Net-Zero resources for financial institutions.

8 SBTi has published several other documents on target setting and net-zero1. This guidance complements these existing documents. This document also addresses topics that are described in further detail in other SBTi publications, like the Foundations for Science-Based Net-Zero Target Setting in the Corporate Sector paper and the SBTi Corporate Manual . This guidance and the SBTi's other publications provide a comprehensive suite of information for companies interested in setting science-based targets. What are science-based targets? Greenhouse gas (GHG) emissions reduction targets are considered science-based if they are in line with what the latest climate science says is necessary to meet the goals of the Paris Agreement - to limit global warming to well-below 2 C above pre-industrial levels and pursue efforts to limit warming to C.

9 The SBTi currently validates scope 1 and 2 SBTs that are in alignment with limiting global warming to well-below 2 C as a minimum level of ambition. However, in response to the 1. More information on the SBTi's Net-Zero project can be found on our website at 1. SBTi Net-Zero Corporate Manual Version | July 2021. @ScienceTargets /science-based-targets Partner organizations urgency and scale of the climate emergency, the SBTi is ratcheting up its expectations for businesses by ensuring all targets align with a C future. From 15 July 2022 onwards, the SBTi will only validate targets aligned with C for scope 1. and 2 and a minimum level of ambition of well-below-2 C for scope 3.

10 Updates to the target setting criteria (Version ) in line with the new SBTi Net-Zero standard will be launched in November 2021. This is described in further detail in this document in the section on Changes to near-term SBT criteria . The Net-Zero Standard development process Recognising that the definition of Net-Zero and the path to get there is often inconsistent, the SBTi began developing the Net-Zero Standard to provide business leaders with a common, robust, and science-based understanding of Net-Zero . The SBTi is undertaking this process to provide clarity and to ensure companies can be confident their actions are in line with climate science.